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Pension Options At Retirement

Pension Review

Pension options at retirementMost Personal Pension, Stakeholder Pension and Free-Standing AVC funds are used to purchase an Annuity at retirement. Put simply, you give up your fund, or 75% after taking the tax-free cash, in exchange for a guaranteed income for life.

The Open Market Option is your right to find the most competitive rate available, but this can be a well kept secret.

So, you are approaching your selected retirement age and your Pension Plan or Scheme provider writes to you and says:

“Well done, you’ve got this far, now here is your fund value, option to take 25% as cash (currently tax-free) and some annuity choices. Please tick the appropriate box and return in the SAE provided.”


There are so many other options to consider when making a decision that will determine the shape and level of income for the next ten, twenty, maybe even thirty or more years:

  • Firstly, there is an option to shop around, using the “Open Market Option”, your right to seek an improved Annuity rate from an alternative provider
  • Next, consider if any pre-existing health conditions, or a long-term smoking habit may allow purchase of an Impaired Life Annuity offering a higher level of income based on reduced life expectancy
  • Do you need a rising income, or a higher income immediately to enjoy life while you can?
  • Does provision need to be made for a spouse or partner, should you pre-decease them?
  • Should you consider an Investment-Linked or With-Profits Annuity for greater income flexibility and potentially hedge against inflation?
  • For funds exceeding £100,000 or where other sources of income are available, it may be appropriate to draw an income from the fund, using the Income Drawdown route, rather than give up the fund to buy an Annuity
  • Should you take the tax-free cash entitlement at outset, or an increased income for life?

There is so much to consider and of course it is possible to secure your income more than one way. We would be delighted to offer a Retirement Income Options Report to help you make these crucial long-term decisions.

Call now for an Initial Chat: 020 8660 2397

We offer an initial meeting at no cost to you and without obligation, to discuss how we can assist you with any matter relating to Pensions.